Frequently asked questions

The basics

HOW CAN NOVICAP HELP MY BUSINESS?

NoviCap enables you to finance your business by selling the collection rights of your outstanding invoices to a pool of professional investors. This means you are able to access up to 90% of the invoice value in less than 48 hours.

WHICH BUSINESSES CAN USE NOVICAP?

You can use NoviCap if your company is B2B (business-to-business) and has an annual turnover of at least £100,000. Additionally, your clients need to have an annual turnover of at least £10 million. NoviCap accepts clients from any country and even public administrations.

Is NoviCap a bank or a factoring firm?

Novicap is neither a bank nor a factoring firm. NoviCap is an intermediate platform that connects companies that want to sell their outstanding invoices with international investors willing to buy them.

HOW MUCH DOES IT COST?

NoviCap uses smart pricing, which means risk is based on the invoice’s debtor. This means interest rates vary depending on the client. NoviCap typically offers between a 1% and 9% APR, plus a 0,5% operations fee.

Are there any fixed costs?

NoviCap has an opening fee ranging between 1% - 2.75% of the line. This includes year long platform access, client financial reports, account management and risk analysis, among other benefits.

Who is advancing money to my business?

NoviCap is an invoice trading platform which connects a pool of investors with companies like yours willing to sell the collection rights of their invoices. The money advanced to you comes directly from the investors.

Do I need to sell all my invoices?

No. You have the flexibility to choose which invoice you want to sell through the platform. There is no obligation to sell all your invoices.

How much of the invoice will I be able to receive?

The maximum amount advanced per invoice sold on the platform is 90%. The remaining 10% will be transferred to you when your client pays. NoviCap will subtract the fees and the investors’ interest from the 10%.

Do I need to provide personal guarantees or company debentures?

No. As investors spread their risk by buying parts of multiple invoices they are ok with having less onerous conditions for you. Therefore, there is no need for personal guarantees or company debentures.

Does trading invoices affect my credit rating?

No. Trading on NoviCap does not affect your credit rating.

What payment methods are accepted from my customers?

Bank transfers and promissory notes are accepted payment methods.

Financial concepts

What is invoice trading?

Invoice trading is a type of short-term working capital solution which offers your business early payment against outstanding invoices at a certain discount by selling your outstanding invoices (receivables) to international investors.

WHAT IS THE DIFFERENCE BETWEEN INVOICE TRADING AND FACTORING?

Unlike factoring, invoice trading offers you the control and flexibility to choose which invoices you want early payment against. No personal guarantees are required and you are never locked into long-term contracts. Moreover, an amazing customer service team is at your disposal.

Registration and necessary documents

HOW CAN I APPLY AND SELL INVOICES?

The application process is simple and fast. You complete the online registration form and a member of the NoviCap team will be in touch. Once the registration is complete, you can upload and sell invoices to investors through the platform and get access to financing in less than 24h.

WHAT DOCUMENTATION IS REQUIRED TO REGISTER?

The relevant financial information of your company and of your customers is required. You can choose to connect your accounting software to speed up the registration process.

What documentation is required to sell an invoice?

Once you have been accepted onto our platform and have submitted an invoice for review, you will receive a quote within 24 hours. Once you have accepted the quote, the invoice will be sold to our pool of international investors.

Invoice payment

What documentation do I need to provide to advance an invoice?

You will need to provide an original copy of the invoice and a delivery note (for physical goods). Any additional information such as a contract of sale can help investors in their decision-making process.

HOW LONG WILL IT TAKE TO RECEIVE A PRICE QUOTE?

Once your company has completed the registration and uploaded an invoice, a price quote will be provided in less than 24h.

Can I reject the financing proposal at any time?

Yes. Every invoice receives an individual quote and you may accept or reject the terms of each invoice. There are no long-term contracts.

HOW LONG DOES IT TAKE FOR THE FUNDS TO REACH MY ACCOUNT?

Investors advance up to 90% of the total amount of the invoice in less than 24h. The remaining 10% will be transferred once your customer pays the invoice.

How do I inform my client that I am using NoviCap?

You must inform your customer that you are selling invoices and NoviCap can advise in this process.

How does my client (debtor) need to pay NoviCap?

Payments can be made through bank transfers or promissory notes and your customer will need to pay into our central clearing and settlement account held by Barclays Bank Plc. No cash payments are accepted.

IS THE WEBPAGE SAFE? HOW CAN I CHECK THE STATUS OF MY APPLICATION?

NoviCap uses security equal or superior to other online financial service providers and banks. You can monitor the real-time status of your application and update your documentation online at any time.

WHAT HAPPENS IF MY CUSTOMER PAYS LATE?

In case your customer pays after the expected payment date, investors keep receiving interest for the overdue period, the interest accrues per day.

WHAT HAPPENS IF MY CUSTOMER DOES NOT PAY?

In case of non-payment or only partial payment by your client, investors can take recourse. Practically, this means that you will have to repurchase the invoice and pay any fees incurred.

WHAT WOULD HAPPEN IF NOVICAP WERE TO GO OUT OF BUSINESS?

Member funds invested or received through the NoviCap platform are held in segregated client accounts hosted with Barclays Bank Plc and are never transferred into NoviCap accounts. Therefore, your funds will never be part of NoviCap’s balance sheet. Should NoviCap go out of business, this segregation and other measures taken by NoviCap ensure that all transactions are fulfilled and settled without any business disruption to registered members. Barclays Bank Plc is fully aware of the nature and details of NoviCap and would be able to support the settlement process.

IS MY DATA SECURE WITH NOVICAP?

All investors registered on NoviCap sign strict confidentiality agreements for the information they are able to access on individual businesses and invoices. Investors are only able to use this information to decide whether to buy an invoice, and are forbidden to share this information with any third party.
All the details provided during the registration and invoice selling process are stored securely using the latest technology. NoviCap is registered with the Information Commissioner’s Office under registration reference ZA103509.

How long will it take before I receive an answer regarding my application?

You will hear back regarding your application within five business days.

Do I need to pay any registration fees?

No. There are no set-up or registration costs.

WHICH DOCUMENTS ARE REQUIRED IN ORDER TO APPLY AS AN INVESTOR?

Our online registration form will ask you the exact documents to submit. We require proof of ID, proof of address, and funds.

Who should I contact for help?

You can contact NoviCap by email (investors@novicap.com) or phone (+44 20 3823 6476).

Your account

What happens with my deposited funds?

NoviCap does not take any deposits. Investor funds are placed in segregated client accounts held at Barclays Bank Plc and each Investor holds a dedicated client account. There is no right of offset against any balance sheet obligations or any charges against NoviCap. At no point do investor funds flow into any of NoviCap’s own bank accounts.

How do I withdraw funds from my account?

You can withdraw non-deployed funds from your account at any time and a withdrawal request is typically processed within five business days. Funds invested in invoices cannot be withdrawn until the invoice is paid. NoviCap does not offer a secondary market.

What happens with my funds if NoviCap becomes insolvent?

Should NoviCap become insolvent, we have the necessary processes in place to ensure that all transactions are settled without disrupting your business.

What proportion of my funds will be invested at any given time?

On average, at least 80% of funds with NoviCap can be deployed at any given time. However, there can be fluctuations and the short duration of the asset class inevitably leads to a portion of non-deployed funds. You should also monitor your automated trading settings in order to not become excluded from trades.

Do I receive interest on my non-deployed funds in my account?

There is no interest due on non-deployed funds in your account.

Investing

How does a transaction work?

As an investor, you buy invoices or fractions of invoices, at a predetermined discount to their face value, set by NoviCap. For each transaction, NoviCap advances the funds from your account to the selling business ("seller"). On average, 90% of the invoice face value is funded ("advance rate") by investors. Over the life of the invoice, the investor accrues interest on a daily basis until the invoice matures (or is repaid). At maturity, the seller’s customer ("debtor") repays the full face value of the invoice to the seller’s NoviCap account. NoviCap then repays the advance rate and all accrued interest to investors, after which the funds can be reinvested in other invoices. The remaining balance of the invoice (the difference between the invoice face value and the advance rate) is paid back to the seller of the invoice.

What is the average size of transactions on NoviCap?

Invoices typically range from between €5,000 and €50,000 and are fully subscribed within 12 hours. Invoices are usually split among ten investors or more.

What type of companies are paying the invoices?

The companies paying the invoices are typically large companies with more than 10 million euro in revenue. They can also be corporations based abroad or public administrations.

What kind of businesses sell their invoices on the platform?

All companies selling invoices on the platform are limited liability companies which operate in Europe. They span diverse industry sectors and must pass anti-fraud and credit checks before selling invoices.

How is the price of an invoice determined?

Invoices on NoviCap are sold at a fixed price set by NoviCap’s pricing model. Each trade will have an advanced amount, face value and an interest rate. The advanced amount is a percentage of the face value of the invoice which varies depending on the risk of the trade.
The interest rate accrues over the actual time the invoice is outstanding and the final return will be known when the invoice is paid by the debtor.

Which currencies can I invest in?

Most invoices are traded in GBP, USD or EUR. There are also smaller volumes of JPY, CNY and KRW.

HOW DO I ADJUST MY INVESTMENT PREFERENCES?

You set your investment preferences to control your trading and place bids based on target return, duration, exposure limits and other parameters. Automated trading offers both simple and advanced settings, dependent on the level of control desired. You can control and update these settings as often as you like.

HOW SHOULD I TREAT INVESTING IN INVOICES FOR TAX PURPOSES?

Prospective investors are recommended to consult an independent tax adviser. Investors can download a return statement which calculates the interest earned within a specified period for tax purposes.

Risk

What are the risks of investing in invoices via NoviCap?

Investing in any investment product places your capital at risk and so does investing in invoices through NoviCap. Building a diversified portfolio of multiple invoices is the best way to reduce risk.

HOW IS THE CREDITWORTHINESS OF EACH INVOICE EVALUATED?

Investing in any investment product places your capital at risk and so does investing in invoices through NoviCap. Building a diversified portfolio of multiple invoices is the best way to reduce risk.

STEP ONE: SELLER ELIGIBILITY
Prior to selling invoices on NoviCap, prospective sellers go through a rigorous review process which includes financial reviews, bank statement reviews, director reviews, and anti-fraud checks. Only after this initial risk assessment, the seller can start selling invoices. Furthermore, each seller is assigned a limit on the amount that can be advanced to him at any point which is based on historical revenue and statutory accounts.

STEP TWO: VERIFICATION AND PRICING
Each trade (invoice) is reviewed on a standalone basis and verified directly with the debtor. The seller has to provide all required documentation to NoviCap, including the invoice. NoviCap will then check all documentation for consistency and, if approved, assign a price to the trade.

STEP THREE: MONITORING
NoviCap carefully monitors all active sellers' creditworthiness through automated procedures and alerts from a number of sources, focusing on new charges placed on the sellers' assets, company insolvency notifications, and credit rating changes for the seller company.

TO WHICH OTHER INVESTMENT PRODUCT CAN INVESTING IN INVOICES BEST BE COMPARED?

The average invoice on NoviCap has a duration of 60 days and assuming no defaults or late payments, an investor is expected to receive his investment back at the end of that period. This short duration, highly liquid investment profile is most comparable to money market products, however given that the investment is secured on the outstanding invoices, the risk/return profile of invoice trading is typically superior to an asset-backed corporate bond.

What are the default and loss rates at NoviCap?

As of 1st January 2016, the default rate is 0% since start of operations in 2014. Past default rates are not necessarily a reliable indicator of future default rates. Your capital is at risk.

What rates can I expect to earn through NoviCap?

As of 1st January 2016, the average investor return has been 10.40% annualised, net of fees and losses. Past returns are not necessarily a reliable indicator of future returns.

What fees do I pay to NoviCap?

There are absolutely no registration fees or ongoing service fees. The return you see on the platform is the expected net return.

What happens if an invoice is not paid by the debtor?

Sometimes an invoice is not paid on the expected payment date. In these situations, NoviCap allows a grace period without extra interest for the debtor to complete the payment. At the end of the grace period, NoviCap requires the seller to refund the invoice (unless there is a satisfactory update from the debtor).
NoviCap classifies an invoice as defaulted if there is a delay of more than 45 days from the expected date of payment. NoviCap has the right to classify a trade as criminal before that time if the seller or debtor enters bankruptcy, redirects funds, or if there is suspicion of fraud. In these cases we offer the investor our internal collection services to help recover the investment. Interest continues to accrue on a daily basis during this time.

HOW ARE FRAUDULENT INVOICES AVOIDED?

All invoices pass an anti-fraud process and all sellers are analysed in an onboarding process. Directors are authenticated and invoices are typically verified with the end debtor (the seller’s customer) prior to being sold to investors. Such verification processes determine whether the invoice is accepted by the debtor and will be paid in full according to the terms.